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The novel tells the story of Friedrich Löwenberg, a young Jewish Viennese intellectual, who, tired with European decadence, joins an Americanized Prussian aristocrat named Kingscourt as they retire to a remote Pacific island (it is specifically mentioned as being part of the Cook Islands, near Raratonga) in 1902. Stopping in Jaffa on their way to the Pacific, they find Palestine a backward, destitute and sparsely populated land, as it appeared to Herzl on his visit in 1898.

Löwenberg and Kingscourt spend the following twenty years on the island, cut off from civilization. As they stop over in Palestine on their way back to Europe in 1923, they are astonished to discover a land drastically transformed. A Jewish state officially named the "New Society" has since risen as European Jews have rediscovered and re-inhabited their Altneuland, reclaiming their own destiny in the Land of Israel. The country, whose leaders include some old acquaintances from Vienna, is now prosperous and well-populated, boasts a thriving cooperative industry based on state-of-the-art technology, and is home to a free, just, and cosmopolitanmodern society. Arabs have full equal rights with Jews, with an Arab engineer among the New Society's leaders, and most merchants in the country are Armenians, Greeks, and members of other ethnic groups. The duo arrives at the time of a general election campaign, during which a fanatical rabbi establishes a political platform arguing that the country belongs exclusively to Jews and demands non-Jewish citizens be stripped of their voting rights, but is ultimately defeated.

Herzl's novel depicts his blueprint for the realization of Jewish national emancipation, as put forward in his book Der Judenstaat (The Jewish State) published in 1896. Both ideological and utopian, it presents a model society which was to adopt a liberal and egalitarian social model, resembling a modern welfare state. Herzl called his model "Mutualism" and it is based on a mixed economy, with public ownership of the land and natural resources, agricultural cooperatives, state welfare, while at the same time encouraging privateentrepreneurship. A true modernist, Herzl rejected the European class system, yet remained loyal to Europe's cultural heritage.

Rather than imagining the Jews in Altneuland speaking exclusively Hebrew, the society is multi-lingual – with German, Hebrew and Yiddish being the main languages and reproducing European customs, going to the opera and enjoying the theatre. While Jerusalem is the capital, with the seat of parliament ("Congress") and the Jewish Academy, the country's industrial center is the modern city of Haifa. In the actual Israel, this role was to be taken by Tel Aviv, a city which did not yet exist at the time of writing and whose name was inspired by the book itself (see below).

Herzl saw the potential of Haifa Bay for constructing a modern deep-water port. However, in reality it would be the British Empire rather than the Zionists which would realise that potential and make considerable strategic use of it during the Second World War. Though Israel would eventually inherit the Haifa port and city, by 1948 the central role of Tel Aviv was established, with Haifa – though a major Israeli city – relegated to a secondary position.

As envisioned by Herzl, "All the way from Acco to Mount Carmel stretched what seemed to be one great park". In the actual Israel the very same area became a giant industrial zone, reckoned the most heavily polluted part of the country.

The book was immediately translated to Hebrew by Nahum Sokolow, who gave it the poetic title "Tel Aviv", using tel ('ancient mound') for 'old' and aviv ('spring') for 'new'.[1] The name as such appears in the Book of Ezekiel, where it is used for a place in Babylonia to which the Israelites had been exiled (Ezekiel 3:15). The Hebrew title of the book was chosen as the name for a new neighbourhood of Jaffa, established in 1909 under the uninspired name of "Ahuzat Bayit", lit. "Homestead". The new name, Tel Aviv, replaced the original one already one year later, in 1910, and was used for the expanded settlement, now comprising two more adjacent neighbourhoods. Eventually Tel Aviv would become known as "the first [modern] Hebrew city" and the central economic and cultural hub of Israel.

Herzl's friend Felix Salten visited Palestine in 1924 and saw how Herzl's dream was coming true. Next year, Salten gave his travel book the title Neue Menschen auf alter Erde (“New People on Old Soil”),[2] and both the title of this book and its contents allude to Herzl's Altneuland.[3]

^Shlomo Avineri, Zionism According to Theodor Herzl, in Haaretz (20.12.2002). Quote: "Altneuland" is [...] a utopian novel written by [...] Theodor Herzl, in 1902; [...] The year it was published, the novel was translated into Hebrew by Nahum Sokolow, who gave it the poetic name "Tel Aviv" (which combines the archaeological term "tel" and the word for the season of spring). [1]